INTRODUCTION – JURISDICTION ON THE INTERNET
The term ‘Jurisdiction‘ refers to a court’s power to hear and decide a certain case or make an order. The term also refers to the territorial limits within which a Court may exercise jurisdiction over a matter. Being an aspect of a nation State’s sovereignty, jurisdiction will generally be confined geographically. Traditionally jurisdiction has been based on territory. However transactions or publications on the Internet generally span many borders. Given this cross-border element in Internet-related cases, questions will arise over the circumstances in which a court can exercise jurisdiction over a defendant located or domiciled in a country other than the country in which a complaint has been made about an alleged offence or civil wrong committed over the Internet. This is generally a question to be resolved by domestic courts applying relevant principles of private law on jurisdiction.
JURISDICTION GOVERNING THE CONTRACT
The jurisdiction which governs an electronic contract may either not be clear or contrary to what one or both of the parties intended it to be. There may be potentially multiple jurisdictions that applicable to a particular transaction or it is unclear either what country’s courts can exercise jurisdiction over a dispute and what country’s laws will be applied to resolve a dispute.
You cannot automatically assume that just because you are dealing with an organisation or an individual from a foreign country or jurisdiction that your domestic laws will apply to any dispute which arises.
National legal systems have developed complex rules about which laws apply in the event a cross border disputes called ‘conflict of laws‘ or ‘private international law‘. Rules regarding conflict of laws vary from country to country.
For instance in the US there is a strong emphasis on ‘connecting factors‘ between the party or event the subject of the action, and ‘long arm statutes’ exist in each of the States which are applied to decide whether a particular court will assert extraterritorial jurisdiction over a particular dispute.
Conflict of law rules attempt to resolve cross-border disputes between legal systems of
different countries, which may involve disputes ranging from contractual disputes to tortious claims or intellectual property disputes.
JURISDICTION – CHOICE OF FORUM
Firstly, there is a threshold or preliminary question as to whether a court has any power at all over the parties to the dispute, ie whether a court can exercise jurisdiction over the dispute. The answer to this question is determined by exploring the law of the court’s
state or country otherwise known by the latin term lex fori or ‘law of the forum‘. In
Australia for example, courts will assume threshold jurisdiction or power over a matter where it can be proven either that the defendant has submitted themselves to the court’s jurisdiction (by contract or agreement), or has been served with originating process, which is the first step in a lawsuit. The defendant must have been served whilst present within the territorial borders of the jurisdiction. Corporations are deemed by law to be present in the jurisdiction if they conduct business here, whether they be domestic or registered foreign corporations.
The court may also exercise their discretion to authorise a person to locate and serve legal process upon the defendant outside the jurisdiction. When a party seeks the courts’ permission to serve a party outside the country’s jurisdiction the Rules of Court will outline the factors determining whether this is likely to occur. It will depend on whether the party seeking to serve the person outside the jurisdiction is able to convince the court to approve service outside of the jurisdiction, and may depend on the type of claim involved, whether it is in tort or contract, and questions such as where the balance of convenience and justice lies in relation to both parties.
Normally there will need to be some connection between the Australian and the defendant and/or the cause of action claimed. Although courts in Australia havn’t yet dealt with jurisdictional issues in disputes involving e-commerce, there have been decisions in matters related to defamation over the internet. See Macquarie Bank Limited & Another v Berg  NSWSC 526 and Gutnick v Dow Jones.
Disputes may arise in various areas of commerce such as advertising, consumer protection, intellectual property, gaming, sales of goods and taxation. There has been an Australian case in which the Federal Court of Australia has assumed jurisdiction in relation to foreign advertising which affected Australians via the internet through a website which was hosted and operated in a foreign country.
In ACCC v Chen  FCA 1248 the Federal Court applied the provisions of the Trade Practices Act 1974 to a website which sold theatre tickets for the Sydney Opera House, and in doing so breached the sections of the Act relating to misleading and deceptive conduct. Customers purchased tickets which they either didn’t receive or were overcharged for tickets which were delivered to them. The Federal Court of Australia was satisfied that it could assume jurisdiction having determined that the breach occurred in Australia. Cross-border advertisements of pharmaceuticals, banned books, illegal guns and weapons and controlled substances may raise additional issues for consideration.
JURISDICTION – CHOICE OF LAW
In addition to deciding whether a nation’s courts will exercise jurisdiction over a particular
matter a second question arises as to what country’s substantive law a court seized of a dispute will apply to the parties. For example it is possible for an Australian court to apply the rules of a foreign legal system in an Australian court in preference to local laws. This is called ‘choice of law‘ and each country has it’s own rules for determining this question.
Conflict of law rules make it very difficult for parties engaged in e-commerce to predict where disputes which arise are going to be heard and what laws are going to apply.
A convenient way of resolving issues of jurisdiction is to insert a jurisdictional clause
into a contract which stipulates which law will govern the contract as follows:
“This agreement is governed by the laws of Australia and the parties submit to the jurisdiction of the Australian courts“